Weekly Guide to CBS.MarketWatch.com 06-22-98

CBS.MarketWatch.com

CBS MarketWatch's Weekly Guide Using Industry Indexes

SAN FRANCISCO (CBS.MW) -- There's a data service on CBS MarketWatch that gives you indexes on almost anything you can imagine. Here's just a sample: and many more. Why should you care about these? We'll tell you.

Editor's Note: This is the tenthin a series to help our readers take full advantage of CBS MarketWatch.com.

Let's say you're an investor in a well diversified portfolio, having at least ten industries represented. Some of your stocks are small-cap, some mid-cap, and some large-cap. "Cap" stands for capitalization, and you get that for a stock by multiplying the number of shares outstanding times the price of the stock.

With your diverse portfolio, both in industry and cap size, with what do you compare it to determine your portfolio performance? The Dow Jones Industrial Average
DJIA, -1.32%
, the most quoted and well known of all the indexes is composed of 30 stocks, all large cap diamonds. Most of us don't have portfolios that look anything like the Dow Jones
DJIA, -1.32%
. However, by taking your industry groups and comparing their performance against the appropriate index in this site, you can better judge your investing acumen.

Compare your stocks with the group Assume you have three Internet stocks. How do you compare them to an index? Well, you've got three choices of Internet indexes on the Industry Index page. One of them is trading on the (American Exchange), one of them is on the (Chicago Board Options Exchange) and one of them is monitored by By clicking on the blue lettering of the index name, in this case we'll use the Internet index from the , you'll go to a page which lists all the stocks that make up that index. If you own three of the stocks on the index, you know you've got a good comparison for your Internet section of your portfolio.

So comparing your stocks with the index of the same industry group is one way to use the Industry Indexes. Here's another:

Index as guide Let's say you don't own any stocks involved in the Internet and want some. Then look at the index as a resource to give you the best stocks in the group. When you click open the for example, you'll see an alphabetical listing of 37 stocks directly involved with the Net. Each stock is linked to the current quote, charts, news, and research about it. The other two Internet indexes, one from the and one developed by , have fewer companies but also have a few names that aren't in the index. So to get a full picture of the Internet companies, you'd want to look at the composition of each index.

You can be sure that the companies included in these indexes are the established players in the industry. No one is going to make an index with marginal firms. So if you're looking for the top tier companies, they'll be in these indexes.

One caution: be sure to look into the company's actual business description, something you can find in the Hoovers Capsules. Hoovers is one of the options to the right of any quote you get on a stock. Some companies included in an index will have several divisions and have only one dedicated to the industry in the index. They're included anyway because they may be a dominate force within the industry even though the company has only part of its revenues from that industry. Think of GE
GE, -1.54%
and its NBC division as an example.

That means, as an investor, you won't get a pure investment in the industry by buying that stock. This may be a comfort to some investors because the company is diversified into several industries. On the other hand, if you're looking for a pure play in the industry, then you'll want to keep looking for a company with its single focus on your industry.

The Industry Indexes is a unique feature on the Web. You can use it to judge your performance with a distinct group of stocks, or you can use it to find some of the best stocks in an industry. It's a great tool and time saver.

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